Games in Markets, Crypto & Business · Applications
Games in Markets: Runs, Squeezes & Beauty Contests
Markets are games where your payoff depends on what others believe. Keynes's beauty contest and the guess-2/3 game, levels of reasoning, bank runs as coordination failures, and short squeezes such as GameStop.
Step 1 of 6 · Overview35 min read ·
Key idea
Prereqs: Coordination & focal points; Market microstructure. Next: Crypto game theory. Sources: Keynes, *General Theory* ch. 12 (1936); Nagel (1995); Diamond & Dybvig (1983; Nobel 2022); SEC staff report on GameStop (2021); Game Theory Online (Stanford/UBC).Next: 1. The beauty contest